Hi, I just don't get the difference between the two, can someone explain please
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AS Economics - LRAS & SRAS watch
- Thread Starter
- 21-02-2016 12:24
- 21-02-2016 12:34
Imagine the short run curve as all the different amounts of output that an economy could produce right now. It could produce anywhere in that curve, no problem.
But it couldn't produce past the end of the curve, say because it doesn't have enough factories, or because our knowledge and technology is limited. The long run curve is vertical, and it shows that limit - the end of the short run curve.
To build more factories and improve our knowledge and technology takes time, that's why it's the long run. if you want to change it, it takes time to build new factories etc. I think it gets a bit confusing because there are different ways of graphing it.